by
Brian Gomez
Agricultural recovery will
be a long time coming
Bottom Line last week tried to
explain why good policy changes generally takes time to flow
through in the form of improved results, the lag usually involving
years.
Policies implemented five years ago in the mining and exploration
arena and forestry are beginning to flow through in terms of more
jobs and royalties, but the advent of higher corporate tax
payments will come later.
Agriculture is one area that has seen little meaningful reform in
well over a decade.
In the first couple of decades after independence, the “hard kina”
policy was a strong deterrent to agriculture, making it very
difficult to compete against imports from Australia and elsewhere.
Once the kina was devalued in 1994, this situation changed
significantly. There have been suggestions of increased domestic
food production and a slowing down in the food import bill in
recent years.
In spite of those market-induced trends, the agricultural sector
has continued to be neglected by successive governments even
though it is one area of activity that will have a widespread,
positive impact on living standards.
Why this has been so is a difficult question to answer.
It is part of the general malaise of poor policymaking and the
poor ability of the government bureaucracy to deliver better
results.
All of this is possibly also impacted by a lack of a political
will.
It seems much easier in PNG, as in most developing countries, for
governments to take care of the needs and concerns of the elite in
society.
Much of the better government services are provided to a small
minority of people who live in the key urban centres.
This has been especially obvious in the recovery underway in the
last few years with the large increase in the numbers of cars on
the roads in Port Moresby and Lae and the big increase in
activities noticeable at supermarkets and retail centres.
By contrast there has been little noticeable change for people who
live along remote sections of the Sepik or Fly River and in other
remote parts of the country, although a start has been made to
improve service delivery through the district services improvement
programme.
But on the question of agriculture, Bottom Line has to point out
that official government statistics point to a dismal record with
little or no growth over long periods of time.
This could lead one to assume that most government agricultural
commodity boards have been a waste of time and money, and there
are certainly other broader problems involved.
One of these is the issue of access to land for private investors
and the inordinate amount of time it might take for particular
projects to come to fruition.
There are certainly
other ways to improve production and productivity on
community-owned land but cultural attitudes may be a deterrent to
development. Many landowners can lay claim to vast tracts of land,
but if the land remains fallow and unproductive, it is of no help
being as useless as undiscovered mineral resources.
In recent times, agricultural exports may have appeared to provide
bonanza incomes, as happened during the vanilla boom, but this
phenomenon is only due to price fluctuations for various
commodities.
Coffee grown mainly by smallholders in the Highlands was a premier
export crop for many years until it was overtaken five years ago
by palm oil, which is mainly a plantation crop.
Export revenue from coffee hit an all-time high of K471 million in
2005.
In that year it was higher than the K391.4 million collected from
palm oil.
When prices are high, growers make an extra effort to collect and
sell coffee beans and the output in that year was 72,100 tonnes,
the highest figure this decade.
But the following year, 2006, output fell to 52,300 tonnes due to
cyclical factors, making it the lowest export figure for many
years.
The poor export performance for coffee is shown by the fact that
exports had reached more than 80,000 tonnes in the early 1990s,
leaving little doubt we have gone a long way backwards in the
meantime as population pressures mount.
One sign of the industry’s poor performance comes from the
continued closure of some premier plantations.
The 2000 census suggested that 397,000 families or some 2.5
million people – almost half the country’s population – benefit
from coffee exports.
The one commodity that has been showing steady export growth is
palm oil but growth here is far less than the surge enjoyed by
countries such as Indonesia, Malaysia and Thailand, where
population is growing at a more moderate rate.
Part of the peace-building process in Bougainville resulted in
thousands of hectares of new cocoa plantings.
Yet total exports last year amounted to 44,000 tonnes compared
with 41,000 tonnes in 1996.
About 151,000 households or about one million people in 12 coastal
provinces grow cocoa.
How much better off would they be today if their cocoa output had
been growing by just 3% annually since 1996?
Mismanagement, corruption and a disinterested government had
virtually brought the copra industry to its knees with exports
plummeting to an all-time low of 8,400 tonnes in 2003.
There has been significant recovery since then after the Somare
Government took away the industry board’s monopolistic export
powers, providing an additional fillip to two coconut oil mills
that were both on the verge of closure.
Coconuts are a source for food and are increasingly having a role
as a home-made fuel, but productivity has fallen over the years
even though more than 300,000 families derive benefits from
coconut trees.
The government has promised that significant financial resources
will be diverted to promote agricultural growth, possibly to the
tune of K100 million a year.
If that does happen, it is likely to take more than five years to
see the real benefits start to flow through. Otherwise the sector
will keep going backwards and rural poverty will worsen.
